AirBaltic 2012 Loss Beats Plan on Reduced Fleet Size, Christmas

AirBaltic AS, Latvia’s state-owned
airline, narrowed losses more than forecast last year after
cutting costs and a better-than-expected Christmas season, said
Chief Executive Officer Martin Gauss.

AirBaltic yesterday said its net loss had narrowed to 19
million lati ($35.5 million) last year from 85 million lati in
2011 as it cut routes and revenue remained little changed. That
compared with a company forecast for a 38 million lati loss.

“The main reason is cost savings, our fleet is much
smaller and we achieved the same revenue by flying less,” Gauss
said in an interview in his Riga office. First-quarter results
are “much better than planned” and may be released in May, he
said. The company targets a loss of 16 million lati for this
year.

AirBaltic, which is the subject of a European Commission
probe over state aid since November, is planning on upgrading
its fleet, replacing Boeing Co. (BA)’s 737s with Bombadier Inc (BBD/B)’s
CSeries starting at the end of 2015 to reduce fuel expenses.

The Latvian airline has planned for 10 CSeries aircraft,
and expects to use a majority of its options for more, the CEO
said.

“If we could change the Boeing fleet with the CSeries
today with the current fuel prices, the difference in
operational cost would be $30 million just by changing
aircraft,” he said.

The Latvian government hasn’t found an investor for the
airline since it invited expressions of interest in August.

“I think what’s holding up the investor is that you in
general don’t want to invest heavily in European airlines” now,
said Gauss.